Ray's parent company finalizes bankruptcy exit

BROOKINGS — The parent company of Ray's supermarkets in Oregon and California is edging closer to the end of its bankruptcy proceedings.

By Greg Stiles

BROOKINGS — The parent company of Ray's supermarkets in Oregon and California is edging closer to the end of its bankruptcy proceedings.

C&K Market's largest creditors would become equity partners in the grocery chain, while unsecured debt holders will be paid 80 cents on the dollar, according to a second-amended plan of reorganization filed with the U.S. Bankruptcy Court for the District of Oregon.

The plan also will create a board, including present chairman Doug Nidiffer, the son of co-founder Ray Nidiffer; William Kaye, chosen by the creditors committee; and three chosen by investment fund lenders Endeavour and THL Credit: Steven R. Wilkins, W. Hunter Stropp and Iain G. Douglas. (Clarification: The full name of THL Credit has been added to this story.)

A confirmation hearing has been set before Judge Frank Alley on June 25. If the plan is approved, C&K Market would emerge from Chapter 11 sometime in July.

"I was hoping for an early June confirmation date, but we're pretty much on schedule," said Al Kennedy of Portland law firm Tonkon Torp, C&K Market's attorney.

The Brookings-based parent company of Ray's Food Place and other grocery stores in Oregon and Northern California filed for Chapter 11 court protection Nov. 19 and has since sold off its pharmacies and closed or sold 15 stores. It continues to operate stores in Central Point, Eagle Point, Gold Hill, Jacksonville, Merlin, Phoenix, Rogue River and Talent.

There were 8,500 creditors when the company filed for court protection. Kennedy said some priority claims, such as wages, have already been paid.

There are multiple classes of secured and unsecured creditors who have to sign off on the agreement, but Kennedy doesn't foresee any major obstacles.

"This is a pretty unusual plan for an Oregon company," he said.

All debt will be canceled, Kennedy said. Unsecured creditors with claims of less than $10,000 will receive 80 cents on the dollar, with large creditors receiving stock.

"When you're dealing with a publicly held company with debt, that's not unusual," Kennedy said. "This is a little different because it includes all creditors, including trade creditors (vendors). It cleans up the balance sheet so that when the company comes out of Chapter 11 it will be a viable, strong company."

There will be restrictions on sale of the stock, Kennedy said. The company's shares will not be traded on any Securities and Exchange Commission-regulated exchange and will not be registered.

"The company will have approximately 200 shareholders, and they will be free to sell stock under certain circumstances," he said. "They can sell to anyone as long as they give the company the right of first refusal. They can sell to other shareholders, and there are some that will be actively seeking to buy stock."

The company wants to stay beneath 500 shareholders, a level that would trigger the need to register with the SEC.

Once C&K exits Chapter 11, there are many possibilities down the road, Kennedy said.

"Over the next three, four or five years they could do" an initial public offering, he said. "They could merge with another grocery store chain, or could sell the company. That all remains to be seen."

Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter @GregMTBusiness, friend him on Facebook and read his blog at www.mailtribune.com/EconomicEdge.